Rapaport Magazine

U.S. Retail

By Lara Ewen
Sales Slow but Climbing

Summertime is historically a slow season for jewelry retailing. While store owners were not pleased by the slowdown, they also were not surprised. Since the spring brought decent, though not spectacular, sales, most retailers still reported slight increases for 2014, year on year, and they expressed cautious optimism that the fall and holiday will prove profitable.
   Although many retailers had already bought all their significant inventory for Christmas, there were still plenty of decisions left to make. A top concern was how much space to give to estate and alternative engagement merchandise, two categories growing in popularity.

Sales Up Slightly
   Although the overall economy has improved, year on year, since summer 2013, retailers said that has not translated into a significant uptick in sales. “Like for everybody, sales are a little up and down,” said Georgie Gleim, owner of Gleim the Jeweler in Palo Alto, California. “In 2014, I’ve had real good days and quiet days. As of July, we’re flat with last year. The economy is looking good, but I’m not sure how confident people are that it will remain that way.”
   Gleim said her biggest problem is just getting people in the door during the summer. “People are traveling and they’re on vacation,” she said. “Summer can be quiet for just about everyone.”
   Uncertainty was a deciding factor in the Midwest, too, though some of the fear is beginning to dissipate. “Things are going really well, and we’ve had a nice uptick in business since the dreaded winter of 2014,” said Steven Tapper, vice president of Tapper’s, with three stores in the Detroit area. “People here were unsure about what was going on, but Detroit is having an upsurge, and we’re moving ahead. We’re up from last year.”
   On the East Coast, sales have increased slowly but steadily. “It hasn’t been too bad this year,” commented Richard Hegeman, owner of Hegeman & Co. in Providence, Rhode Island. “2013 was pretty good, and this year is maybe a little better. I think that my website does pretty well for me in terms of bringing people into the store, and the fact that I’ve been around Providence for 35 years is good for word of mouth.”

Population Booms Help
   In some areas, such as Austin, Texas, a sharp upswing in population has led to more customers for Joseph R. Villarreal, president of Villarreal Fine Jewelers. “We’re keeping up with our 2014 projections,” he said. “In Austin, the economic climate is really good, and we’re experiencing a population boom. And even though they shop online to educate themselves, customers really want to talk to a professional” when it comes time to buy.
   For other retailers, sales increases have come from a better understanding about what customers actually want. “We’re smarter in 2014 than we were in 2013,” said Robert Tortoriello, sales manager at Bentley Diamond Importers in Wall Township, New Jersey. “So we’re 35 percent up from two years ago, but only 5 percent up from last year. 2013 was a big increase for us because we brought silver in a little more, and we brought in some of the lower-priced items. Also, gold is so high now that a gold chain with a little pendant on it is $700. That’s out of someone’s budget. So we’ve been moving preowned items and estate items — and we make them look new again.”

Estate and Engagement
   Even though second-quarter 2014 numbers were not wildly impressive, estate jewelry was experiencing a boom. “We buy a lot of estate, we’ve increased our estate buying and I’ve advertised our estate buying,” said Tortoriello. “I can buy estate diamonds for less than comparative wholesale, and price them less than they’d sell for online.”
   Preowned and estate sales are also big business for Gleim, who said her estate business is “quite strong.” She feels that customers see estate pieces as a better buy, explaining that “Customers like the value of estate, and they like the fact that they can get something that’s one of a kind.”
   In the bridal segment, more buyers are turning to colored gemstones instead of diamonds for their engagement rings. Some younger customers today “don’t want diamonds for engagement,” said Hegeman. “They want alternative stones, such as sapphires in blues and yellows. There’s a bit of an aversion to diamonds out there for some people, and I think there’s an awareness for how gold and diamonds are mined. People are concerned with that, so they don’t want to contribute to it.”
   Villarreal is also seeing an increase in alternative engagement stones. “Pink sapphire is hot for engagement — and ruby,” he said. “Also, we’re seeing rose gold. I think it behooves us to market more for colored stones anyway. Margins are a lot better with color.”

Article from the Rapaport Magazine - August 2014. To subscribe click here.

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Tags: Lara Ewen